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Prefab is Not The Answer to Affordable, Modern & Green Homes

This article was written by Chad Ludeman, President of Philadelphia-based postgreen and developer of the much talked about 100k House.  Make sure to come back after visiting his websites …

Prefab homes seem to be showing up more and more in the media these days, especially with two large exhibits in Philadelphia showcasing their history this year.  Like many, I hoped that prefab would be the answer to bringing modern architecture to the masses in the US and beyond.  I thought that finally, modern home design would be attainable by those of us who aren’t pulling in lofty six figure incomes. That was until I conducted extensive research into the possibility of starting a development company in Philadelphia using only prefab homes.

Don’t get me wrong, I love prefab and many of the firms out there with cutting edge designs in the prefab realm.  There are also a variety of building lessons that can be learned from the prefab methodology.  I just don’t believe it is the best way of delivering modern design to the average new home buyer.

Below we will look at this issue from two points of view.  First, we will look at the prefab industry and try to dispel some of the myths that have arisen around it.  Second, we will take a quick look at how the housing industry may be able to learn from both prefab and site-built homes to create a hybrid approach that will provide a better, more accessible solution to the home buyer and hopefully reduce the barrier of entry to modern, green, and unique residences.

Names and firms have intentionally been left out of this post in an
effort to discuss only the facts, dispel some of the myths of prefab,
and possibly look towards a better method for bringing modern homes to
the average American.

Prefab’s Claims to Greatness

There are a variety of claims made by prefab proponents to support the idea that this method of home delivery is the best way to provide modern architecture to the masses.  Not every prefab supporter or manufacturer makes every one of these claims, but they are pervasive enough that we will address them as the claims of the industry as a whole.

They are:

  1. Prefab is more Affordable
  2. Prefab produces less Waste
  3. Prefab takes less Time
  4. Prefab is more "Green"

OK, let’s look at each of these "myths of prefab" one by one.

More Affordable.
We are starting here because it is the easiest to disprove, and is also
the main reason that many start looking into prefab.  Unfortunately, most find, after weeks of research, that they just cannot afford any modern
prefab unit on the market today.  This just doesn’t seem fair.

The bottom line is that most modern prefabs today that someone
interested in modern architecture would consider buying will cost at least
$250 per square foot when all is said and done.  This
includes everything but the land cost which can vary greatly based on the buyers location.  There are a
few people out there that claim to get very close to $200 psf, but
there are many more that will quickly go over $300 and even $400 psf.
Stick built modern homes can be built to the same specs as these
prefabs for less than these costs in all but the most expensive areas
of the country.  For example, in my hometown of Philly (6th largest city
in the US) where labor and material prices are far from cheap, most of
the prefab homes I’ve seen could be stick-built for anywhere from $125 – $150
psf.

Prefab manufacturers and resellers will tell you that prefab is
cheaper because of the time and labor savings, but let’s list the key
factors that actually make prefab more expensive than site built:

  • Manufacturing Facility Overhead – Prefab manufacturers
    work in buildings with support staff above and beyond those actually building the houses. They also have facility costs such as equipment, utilities and maintenance … Site built homes, built by most residential builders, don’t have
    any of these.
  • Manufacturing Company Profit – These manufacturers are making at least as much profit as the average general contractor and often more.  The majority of cost savings resulting from the prefab manufacturing process stays in the pockets of the manufacturer.
  • Delivery, Setting, and Crane Fees - These can easily run $10K
    per house (cranes aren’t cheap) and can be significantly more if the
    distance from manufacturer to site is large.  Most manufacturers also dictate who
    the labor crew will be, and often they won’t be the best value available.
  • Architect or Reseller Fees – In some cases the fees charged by the architect providing the prefab can run as high as $30,000 or more.  Even in cases where no additional site customization or design work is needed, a substantial fee will still be added by the architect or reseller. 

Less Waste. Since
prefab is built in a factory they claim to create much less waste by
setting aside their scrap and reusing it in other projects.  What they
do not often advertise is that their structures use 20% – 30% more raw
materials than stick-built homes in order to withstand transportation.  That’s no small figure in my
book, especially considering that even if there is waste on-site with
stick-built homes you can now easily hire a waste removal company that
will recycle 90%+ of your construction waste.

There is something called "value engineering" which can be done
effectively on site-built homes and the polar opposite called
"over-engineering" that is often done with prefabs.  Guess which produces more
waste and costs the client more money.

One last point on the waste topic.  Things like doors swing and cause
damage during shipping so there is a lot of extra bracing in the house
to prevent this damage.  On top of that, there are extra structural
supports inside stairwells and such that are left in the home after
delivery.  Loose materials to finish the homes are also left inside the
boxes upon delivery.  I recently walked through a delivered
prefab with the owner and he offered me pallets of free OSB because he
had so much extra and had no idea what he was going to do with it.  I’m
sure every prefab company is not this sloppy, but it is another
indication of waste in an industry claiming extreme efficiency.

Less Time. Most
prefab companies will claim that there are significant savings because the
construction process is much faster than a traditionally built home.
The site work can be done while the home is being built in the factory
and the actual physical build time on the manufacturing floor is only a few short weeks.  However, in practice there may be months before that process, and months
after, that greatly lengthen the time before the home is ready to be lived in.  If you scour a prefab company’s FAQ’s, call them
or ask others that have gone through the process you will find that
6-12 months or more is not uncommon from start to finish.  With
site-built homes often going up in 4-5 months where is the time savings
in prefab?

More Green. We’ll throw this in here
because "green" is hot now, so the prefab companies are jumping in and
claiming superiority again in the green realm.  Much of the green
claims in prefab come from the lower waste myth that was dispelled
earlier.  The new one that we’ve been hearing more of lately is that the
insulation is installed to better standards than site-built homes
because of the superior labor and inspections put in place by the
factories.

This seems like a weak claim for a number of reasons.  Most prefab
companies are still using loose, batt insulation that is often falling
out of the framing by the time the modules reach the site.  Batt
insulation alone is not what is making the better green homes out there
more energy efficient.  Also, in many cases, all of that house wrap that is supposed to
be sealing up the home from the outside is tearing apart and falling
off of the exterior by the time the modules reach their final resting
spot.  Lastly, the extra framing we spoke about earlier is
causing more thermal bridges in the building envelope. In other words,
the more structural framing that connects to both the drywall inside
and the exterior sheathing outside, the poorer the total insulation of
the home. Wood is a very poor insulator. 

A Possible Hybrid Prefab and Site-Built Approach

What if you were to take the best of both prefab and site-built
methods of home building and combine them into a hybrid approach to
construction and home delivery?

First, let’s start by roughly defining what this hybrid method might include:

  • Quality, stock plans from qualified architects that meet local
    codes and can quickly receive zoning and building permit approvals.
  • Educated clients that understand they are not buying a fully custom home.
  • Prefab building envelope – SIPs, ICF’s & Precast Walls.
  • Internal prefab components made in local shops — interior framing,
    framing with electrical & plumbing, prefab kitchen/bath/utility
    pods.
  • Better scheduling and local subcontractor cooperation

Quality Stock Plans
The
first place to start when trying to streamline and cut costs from any
building project is with high-quality building plans from qualified
architects.  If every detail down to the last sheet of drywall and
bucket of paint is nailed down and proven out in each set of plans, it
becomes much easier for a GC to provide the best price from his crew
and any subcontractors that are hired for the job.  This can not be
undervalued, since any uncertainty on the part of those bidding on the
project will instantly up the quotes.  This is where prefab gets most of
the efficiency gains in their process, by building exactly the same
home over and over.  They know exactly how much material and how much
labor goes into each home plan in their library of options.

Another
point to make here is the need for plans to be developed or easily
modified for any location in order to ensure a fast permitting process.
Zoning and building permit acquisition can add months to a building
project, so having a way to expedite this phase of construction can be
a significant cost saver that should not be overlooked.

An Understanding of Semi-Custom by the Client
One
of the big reasons that fully custom homes designed by architects are
expensive is not necessarily related to the architectural firm’s fee.
It has more to do with the fact that the client is choosing exactly
what they want in terms of appliances, layout, and finishes. There is
nothing standard about this process.  The GCs that bid on these homes
will be forced to deal with any number of materials or construction
processes, some of which they might be seeing for the first time.  They
may not be able to get their normal discounts on preferred brands and
the uncertainty in labor costs will add a healthy premium to their
bids.  An experienced GC knows that there will be many changes during
construction on these custom homes due to the owner changing their mind
or inadequate documentation on the building plans, and they will pad
for these changes in their budget.

What clients must understand
in any prefab or hybrid method is that the more custom changes they try
to make, the higher their costs will be.  There is not an abundance of
quality prefab or stock plan options out there, which is one of the
reasons everyone ends up wanting to customize so much.  If the stock
plan industry grew, then there would be much more variety to choose
from and less desire to customize.  In the end though, clients will
still need to understand the cost to value ratio of customization.  Most
customizations will probably add $0.50 (if any) in value to the home
for every $2.00 in extra cost that is incurred to make that
customization.

Prefab Building Envelope
Now that
we’ve covered the planning phases of a lower cost hybrid home, we can
get into the nuts and bolts of the structure itself.  The basis of the
hybrid system proposed here is that prefab is good in the right places
and in the right doses.

The best example of this concept is
SIPs or Structurally Insulated Panels.  SIPs are wall and roof panels
that are prefabricated in a factory and then delivered on a flat bed
truck to be assembled like legos on the construction site.  The SIPs
combine the framing, insulation, and exterior sheething all into one product.  The
windows and door openings of a home can also be cut exactly to size
with framing lumber attached so that they are 100% ready for the
windows and doors to be installed on site once they are in place.  The
product is superior to traditional insulation methods in that it offers
higher R-values per inch and an overall tighter home envelope.  There is
far less thermal bridging with SIPs and dramatically less air leaking
out of the finished house.

The SIPs will often save slightly
on material costs when all components are added together, especially
compared to a full prefab house that requires up to 30% more lumber to
withstand shipping.  The SIPs are also flat-packed, usually on one
truck, which reduces transportation costs compared to prefab which will
require multiple truckloads of modules to the site.  SIPs can be
handled by a fork lift or lull on site as well as by hand, which
eliminates the very costly expense of a full-sized crane and operator
at the site (always needed in prefab).  The panels will go up in
3-5 days on a typical home which beats stick building by a long shot
considering that the SIPs include insulation and sheething.

Similar
products to SIPs are precast concrete wall systems like Superior Walls
that include insulation.  These walls can significantly reduce time in
the foundation and basement portions of the build.  ICF’s or Insulating
Concrete Forms
is another alternative to SIPs or precast walls.  These
are basically hollow blocks of Styrofoam insulation that can be linked
together quickly and have concrete poured in the centers to form the
finished structure.

Internal Prefabed Systems
The next
suggested use of prefab in the hybrid model is not used very often in
the US, but has been used extensively for years in other parts of the
world.  Many good framers are able to prefab most interior walls, stairs,
and even some floor decking off-site to speed up the installation
process on-site.  This off-site framing can be done in a local workshop
while the foundation is being set on a home and while the SIPs are
being made in a nearby factory.

The next step in this concept
would be to include electrical, plumbing, and gas line runs in these
prefabbed walls to further reduce construction time on-site.  The
building codes in the US make this very tricky, but the Swedes have been doing this for years with great success.

Lastly,
the furthest development of this prefab interior component idea is to
actually prefab entire kitchen, bath, laundry, closet, and utility
assemblies at a local off-site location.  These small modules would not
be subject to the strict structural requirements of larger prefab
modules due to their size and the fact that they would not need to
travel on highways.  They could be dropped right into the homes as the
SIPs were going in place that could result in the vast majority of the
home being assembled on site in only two weeks.  A good example of this
type of system is the Copod designed and built by a company in the UK.

Advanced Scheduling and Building Team
Advanced scheduling and building is something that goes hand in hand
with a good stock plan and a client that keeps customization to a
minimum.  The successful tract home builders in the country that are
building 80% of the new housing stock can teach us something about
process (but certainly not architecture) in this step also.  They have
their build schedules down to the day.

The
way to reduce construction costs on site is to eliminate as many
unnecessary delays in the schedule both with each subcontractor and in
between each sub’s work on the site. This can be done by implementing
the following:

  • A fully developed stock plan with no uncertainty for the GC
  • A qualified GC or Project Manager that can make and keep a good budget and schedule
  • A qualified GC or Project Manager that can reduce delays with local code officials and utility companies to a minimum
  • A team of quality subs with 1-2 backup subs in each field

This
may sound like common sense to many, but in many custom and semi-custom
homes, all of these factors rarely fall into place.  Many construction
sites sit idle for weeks and even months as delays are experience with
specific subs, in between subs or while waiting for local officials to
inspect work that is completed.  These delays must be eliminated to
reduce the on site build schedule from months to weeks on a hybrid
house.

Advantages of a Hybrid Building Method

What are the potential advantages of this type of Hybrid method of building?

  1. Faster – A hybrid approach could easily reduce the total build
    time of a home from start to finish to eight weeks or less if properly
    executed.
  2. Less Waste – The use of SIPs to eliminate most
    framing waste, less transportation, no crane requirement and the use of
    a construction waste recycling company will result in less overall
    waste than than prefab or traditional stick built houses.
  3. LOCAL
    Labor
    – This is a big difference from prefab which uses remote labor to
    perform over 50% of the work.  There are SIPs manufacturers all over the
    country that make the same products and can enable 100% of the
    construction of a hybrid home to use local labor and contribute to the
    local economy.  In my book, this is a big advantage over prefab.
  4. More
    Energy Efficient
    – Better insulation, a tighter envelope and fewer
    thermal bridges from excessive framing equals a much more energy
    efficient home than any prefab on the market.
  5. Unlimited
    Designs from Unlimited Firms
    – Architects no longer need to develop a
    costly and time consuming relationship with prefab manufacturers or
    worry about marketing and selling their designs with the hybrid
    approach.  Many different plans from many different architects can be
    used in the hybrid system anywhere in the country.
  6. Cheaper, much Cheaper – Somehow I almost forgot this key point.  Bringing high quality residential architecture to "the masses" will be done by some type of hybrid building system like the one proposed here long before prefab will due to the significant savings in cost that will actually be passed on to the home buyer.

To Conclude . . . Finally

There
are many amazing things being done in prefab, and if it weren’t for my
self-imposed ban on mentioning specific companies and architects, I
could name a bunch that I personally admire.  However, there are also a
large number of misconceptions about the benefits of prefab that need
to be discussed, and this post is simply trying to get that discussion
started.  Are there points of dispute here?  Certainly. Am I perfectly
correct in everything I have said?  Probably not. So, go to the comments
and tell me what you think.

[Ed. Note - 9/17/08 & 9/18/08] Lloyd Alter of Treehugger, himself a major player in the prefab industry, has added a few points to consider in response to this article and follows those up with Rehab Now.  Allyson Wendt of Building Green also has added her thoughts on the future possibilities of affordable, green prefab.

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